Intel Tumbles, Cramer: Kick Tesla Out of the Magnificent 7, Inflation Watch and the Fed. 01/26/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:05)

Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. We do close out a powerful week today, five straight record highs for the S&P.

And today, Core PCE comes in a bit light, two nine year on year, lowest in almost three years, even as personal spending beats. Our roadmap, though, will begin with Intel. Shares are tumbling after its sales forecast does disappoint.

David Faber (0:27)

Plus, bye-bye Magnificent 7 Why, Jim is now calling it a super six pack.

And inflation in the US consumer, both Visa and Amex say the consumer remains strong, as the latest inflation gauge shows the rate of price increases cooled. This, as last year, came to a close.

Carl Quintanilla (0:45)

We're gonna begin with the chips rally, taking a bit of a detour this morning. Intel is dragging the sector lower after reducing their sales guidance for the current quarter. That overshadows the Q4 beat. Company cites a number of headwinds, including a tough market for programmable chips, weaker sales and autonomous driving.

Jim, your point seems to be it's not really the race that matters here.

Jim Cramer (1:06)

They left out, and AMD is clocking us.

Now, this was one of those quarters.

There's a guy who's a CFO. His name is David Zinser. And that means from Total Heavyweight from Micron. And he had to lower the boom and talk about margins being at 44%. David, there were people who were looking for margins to be 60%. Now, you know, other than Umana, which is like the worst I've seen in a long time, this was quite shocking. It was one of those things where I was waiting for someone on the Q and A to say, look, I want to be sure, David, you didn't say 44, did you? I mean, you didn't do that. 44, 45, 46, is there any give there?

It's extraordinary. I mean, I just don't know how. They didn't just say, you know what? Because some of the analysts applied. And AMD's got our number. And one of the reasons why AMD has been running furiously and should be up, not down today, is because they've, that Intel's become a pitiful, helpless giant.

David Faber (2:04)

Yeah, downgrade today from Needham, again, not particularly helpful, other than saying their core data center business is challenged by a shift to accelerated computing architectures and direct competition from AMD and ARM in this case, when it comes to the data center.

Jim Cramer (2:17)

Yeah, ARM is the one that's doing the wraparound for NVIDIA and ARM is doing incredibly well. People kept hoping that Intel will win that business.

You know, Rene Hoswood told you that, look, we won that business from Intel. I don't know why people felt that Intel was winning that business. Intel's gonna have to spend a lot of money. It's not clear that they're gonna get a bank for the buck and it was just very, very disappointing after a really big run.

David Faber (2:44)

Well, yeah, a huge run last year. Obviously, chips overall had a very strong 2023, but Intel even outperformed that on expectations for a strong 24 So now what, Jim?

Jim Cramer (2:58)

Well, I think, look, AMD reports very soon and Lisa Sue, who's so good, I think will make it clear that it's a question of who has the right chips and Intel just doesn't right now. I mean, Carl, to get these foundries right, now remember, AMD uses Taiwan Semi. To get the foundries right, to have what the customers really want takes a very long time. And I think that what happened is, is that we got very bulled up on the idea that Intel was going to be ready with something and they're not.

And this just was a severe disappointment. Mobileye was a disappointment. They own that.

Carl Quintanilla (3:36)

At least they pre-announced that one.

Jim Cramer (3:37)

Yeah, they did pre-announce that and the programmable logic chips are disappointing. But everything, they're bringing down the complex and that's wrong because the complex is the winner and Intel's the loser.

Carl Quintanilla (3:51)

So when you say we're due for a bruising, you mean in chips, you mean in tech?

Jim Cramer (3:55)

In tech, just because, I mean, tech is just so far ahead of everything else. I just would like to see it calm down.

There are, there's such resistance to being in so many other sectors and a love for tech that it makes it so that we're kind of, I don't want to get back into that moment where we may have to, where there's only seven good ones. But last night was a victory for the people who say, you know what, this one, the tech's too far ahead. And Zinsser, who was so good at Micron, I mean, I thought it was, I detected pain. I detected pain in his voice.